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The airline sector could be buzzing on January 25 with both Southwest Airlines Co. (NYSE:LUV) and American Airlines (NASDAQ:AAL) due to report earnings.
Southwest Airlines (LUV) is expected to report revenue of $6.74B and EPS of $0.13. 17 out of the last 18 EPS revisions from analysts have been to the downward side. The quarter will include lapping the painful wave of cancellations from a year ago, which could help some of the metric comparisons shine. Shares of LUV are 7.3% higher on a year-to-date basis and the airline stock trades above its 100-day and 200-day moving averages.
American Airlines (AAL) is forecast to report revenue of $13.1B and EPS of $0.08. 10 out of the last 14 EPS revisions from analysts have been to the upward side. The Seeking Alpha Quant Rating on AAL is flashing Strong Buy and the quant score is the second highest in the entire airline sector. Shares of AAL are up 1.1% on a year-to-date basis.
Sector watch: Earlier in the week, airline stocks rallied after a strong earnings report from United Airlines Holdings (UAL) boosted investors confidence that the rest of the earnings season will go off better than feared amid concerns over the high jet fuel prices, the Boeing (BA) Max 9 grounding, and profit pressures with averages fares falling. A key read-through from UAL’s report was that business demand is improving. As for pricing, airline fares in the U.S. were down 9.4% in December compared to a year ago on an unadjusted basis. On a month-to-month comparison, air fares were up 1.0% in December after declining 0.4% in November and 0.9% in October, according to data compiled by the Bureau of Transportation Statistics. Fares could become an ever large focus with the potential Alaska Air Group (ALK)-Hawaiian Holdings (HA) and JetBlue Airways (JBLU)-Spirit Airlines (SAVE) in the hopper.